Cost of Public Transport

Lilian Greenwood Excerpts

Tuesday 19th January 2016 Commons Chamber

[Lilian Greenwood (Nottingham South) (Lab)]

I beg to move,

That this House believes that the rising cost of public transport is adding to the financial pressures facing many households; notes that over 2,400 local authority-supported bus routes have been cut or downgraded since 2010; regrets that bus fares have risen by 26 per cent on average and regulated rail fares have risen by up to 38 per cent since 2010; further regrets delays to rail infrastructure projects including the electrification of the Great Western Main Line, the North TransPennine route and the Midland Main Line; notes with regret the decision by the Scottish Government to award the ScotRail franchise to a private operator, rather than exploring alternative options; calls on the Government to bring forward a buses bill as announced in the Queen’s Speech to enable the regulation of local bus networks; and further calls on the Government to rule out the privatisation of Network Rail and instead extend to franchised services the model of rail public ownership that delivered record passenger satisfaction scores on the East Coast Main Line.

I start by wishing the Secretary of State a happy new year, although that will not have been the sentiment that came to most commuters’ minds when they returned to work a fortnight ago. I am afraid it will have been cold comfort to be told by the Under-Secretary of State for Transport, the hon. Member for Devizes (Claire Perry), on the day that fares rose again, that the Government’s plan for passengers was to improve journeys for everyone. The chief executive of Transport Focus gave a more accurate assessment:

“In some parts of the country, given rail performance has been so dire, passengers will be amazed there are any fare rises at all.”

Hon. Members who attended the Southern Railway summit in this place yesterday, and most travellers, would not be able to reconcile the Minister’s statement with their own experience of increasingly overcrowded and unreliable carriages.

[Mr Chuka Umunna (Streatham) (Lab)]

Does my hon. Friend agree that Members on both sides of the House are fed up with excuse after excuse and broken promise after broken promise from Southern rail, and that what we now want to see is action taken against this operator?

[Lilian Greenwood]

My hon. Friend is exactly right. I know that he and my other hon. Friends are holding Southern rail to account for its poor punctuality and poor passenger satisfaction. That underlines the need for reform of the railways.

Let us look at the facts. In 2010, the Conservative party said that it would

“relieve the pressure off both the fare-payer and the taxpayer”.

But what happened? Regulated fares rose by 25%. As a consequence, commuters from Birmingham to London are paying more than £10,000 for a season ticket for the first time. Worse still, Ministers bowed to lobbying from the train operating companies and restored “flex”—their right to vary prices by up to 5%, meaning that some season tickets have gone up by 38% since 2010, and a new Northern evening peak restriction hiked prices by up to an eye-watering 162%.

[Mr Jim Cunningham (Coventry South) (Lab)]

I am sure my hon. Friend will be aware that senior citizens, who might have business in London working for charities, are finding it very difficult to afford to come here unless it is outside peak times, and they are often unable to arrange meetings at times that would suit the off-peak periods. Does she understand that and have a view on it?

[Lilian Greenwood]

My hon. Friend is quite right that it is indeed a concern that people who need to travel at peak times find it almost impossible to find an affordable ticket.

Bus fares have continued to rise, too—up by 26% on average, which is more than three times faster than wages. Some areas have seen much higher rises still. In the north-east, bus fares have consistently risen by 3% above inflation, and it is the non-metropolitan areas that have seen some of the steepest bus fare increases, including in the constituencies of many Conservative Members, with fares increasing by 27% on average.

[Christian Matheson (City of Chester) (Lab)]

The problem with buses is not just bus fares; it is the fact that in rural areas, such as in Saughall or Guilden Sutton in my constituency, the privatised bus companies are simply withdrawing services because their profit margins are not big enough.

[Lilian Greenwood]

My hon. Friend makes an important point. In many cases, it is hard-pressed local authorities that are trying to fill the gap, but of course with cuts it is increasingly difficult to do so.

The Secretary of State may remember when Ministers said at the start of the last Parliament that their cuts to bus funding would not impact on fares or service levels. Perhaps it was before the Secretary of State’s time. Almost six years on, however, the impact of the reductions to bus subsidy and local authority budgets is clear: more than 2,400 supported bus services have been altered, downgraded or withdrawn altogether. Supported, socially necessary bus services accounted for 24% of overall mileage in 2010. Last year, that had shrunk to 17%. The overall mileage of socially necessary services is down by 10% in the last year alone, and the number of transport authorities funding a young person’s concessionary travel scheme has fallen by 24%.

Bus services are used by every section of society, and we need a growing bus industry that can provide new routes to areas that are not currently served and provide people with as many options as possible for travel. We know that buses are particularly important to disabled people, older passengers, those on low incomes, young people and jobseekers. I am proud of the support that Labour introduced, including the concessionary bus pass, which provides a lifeline for pensioners and has kept many networks viable. Six years ago, the Prime Minister said that he would keep Labour’s free bus pass. Indeed, a year ago the Transport Secretary told this House that

“we have kept, and will keep, concessionary bus fares for older people.”—[Official Report, 22 January 2015; Vol. 591, c. 357.]

But what is the point of a free bus pass when there are no bus services left?

[Craig Williams (Cardiff North) (Con)]

Before I entered the House, I sat on the board as a non-executive director of Cardiff Bus. Is the hon. Lady aware that we had to get together as Welsh bus companies and threaten legal action against the Labour Welsh Government on the concessionary fare funding because it was a breach of contract?

[Lilian Greenwood]

You do not want to talk about your own Government’s record on concessionary fares. [Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The hon. Lady does not mean “you”, does she? She means “he”.

[Lilian Greenwood]

The hon. Gentleman does not want to talk about the point at issue. He does not want to talk about what has happened to bus services here in England.

Anyone who searches the speeches and the statements of Conservative Ministers for references to fare rises on buses or cuts in routes will spend their time in vain.

[Several hon. Members rose—]

[Lilian Greenwood]

I will make some progress, and then I will give way.

Bus passengers account for two thirds of public transport journeys, but the Transport Secretary mentioned them only once, in passing, in his speech at the Conservative party conference a few months ago. No doubt he will say that funds have been provided for local authorities to bid for support, and of course investment in cleaner, more efficient buses is welcome, but taxpayers will not realise value for money without reform. Fares have outstripped inflation and wage growth, and savings from the falling cost of fuel are not being passed on to passengers. Throughout the country, bus services are trapped in a vicious cycle in which fare rises dampen down demand and routes are then cut, triggering another round of cost increases.

There was a time when Ministers insisted that

“there have not been the cuts that the Opposition are so keen to talk up.”—[Official Report, 19 April 2012; Vol. 543, c. 485.]

However, when Transport Focus, the official watchdog, surveyed people who had been affected by the cuts, one person responded:

“I have one daughter who is disabled. They have cut her bus on a Sunday and in the evenings, so I can’t go and see her on a Sunday now.”

Another said that they

“Can’t see elderly parents in the evening and care for them as much when they probably need it the most. Can’t afford a taxi because not working at the moment and relied on the bus.”

One respondent simply said:

“I can’t see dad”

in a nursing home

“on a Sunday because there is no bus.”

Conservative Members may say that the Government cannot be held accountable for the operation of a deregulated market, and it is true that London was the only part of Britain that was excluded from the provisions of the Transport Act 1985, but the fact is that, across the country, buses continue to receive very high levels of public support. Of the industry’s costs, 41% are met by subsidy, and the Competition Commission found that genuine competition between bus companies, beyond occasional and disruptive bus wars, was rare. In too many areas the market does not provide comprehensive networks, forcing councils to fund additional services where they can still afford to do so, and placing an additional cost of more than £300 million a year on our hard-pressed local authorities. Nexus, the north-east transport authority, has only been able to maintain local services by drawing on its reserves, while also pursuing reforms that would allow it to deliver better services at a lower cost to taxpayers.

[Andrew Percy (Brigg and Goole) (Con)]

Not everything that the hon. Lady is saying is incorrect, and obviously the position with bus services is very difficult, but it is a question of choices. The hon. Lady should consider what has been done by North Lincolnshire’s Conservative-controlled council. When we took control, it was able to reinstate the No. 37 bus, which had been cut by the previous Labour authority, and extend its services to Wroot and to Crowle. Labour-run Goole Town Council decided to cut the workers’ bus services so that it could pay for a bonfire once a year. So it is about choices. When local authorities are innovative, they can do what we have done in North Lincolnshire, and expand services.

[Lilian Greenwood]

The hon. Gentleman should think about the powers that local authorities have to enable them to make effective choices on behalf of passengers, and that is what I intend to talk about.

While fares continue to rise and routes are cut, some of the biggest bus operators report profit margins of 13% or more on their operations outside London. What was the response of Conservative Ministers? For four years they ignored the calls for reform from Labour Members. I am proud of the fact that Labour has consistently championed the case for bus tendering, but Ministers rigged funding awards to exclude local authorities that pursued regulation, and, shamefully, they remained silent when councillors were subjected to appalling abuse and called “unreconstructed Stalinists” just because they were trying to deliver better services.

While the Treasury’s decision to accept the case for bus tendering is welcome in principle, as is the Transport Secretary’s Damascene conversion, we must question the sincerity of that commitment, and the test will come in the forthcoming buses Bill. Will the Bill make those powers available to all areas that want them, not just to authorities that have reached a devolution agreement? Will it contain measures to protect rural bus services, which are particularly important to those communities, and which have been hit by some of the highest fare rises in the country? Will it protect transport authorities from crippling compensation claims?

The Nexus quality contract scheme boards said that the authorities should have set aside up to £226 million to compensate existing operators for the potential loss of business. If those payments were replicated in Greater Manchester, the Sheffield city region and the north-east, a key northern powerhouse commitment would never get on the road—not to mention the effects on Cornwall and other areas that have sought bus-tendering powers.

The bus market is costing too much and is not delivering for passengers, and we have seen the same trend on our railways. Commuters’ fares have gone up by a quarter since 2010, with season tickets costing up to £2,000 more. Ministers restored the loophole known as flex, which gave the train companies the right to vary prices by up to 5% a year, meaning that the cost of some season tickets has risen by up to 38%, and evening fares in the north have been hiked by up to 162% at the direct insistence of the Department for Transport.

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

Will the hon. Lady remind the House how many years flex was not available for when the last Labour Government were in office? Am I correct in thinking that it was just one year—the year of the election?

[Lilian Greenwood]

The Labour party scrapped flex permanently, and it was the Secretary of State’s Department that chose to reinstate it, as well he knows. It was only as a result of concerted pressure by Labour Members that this Government dropped it over the past two years.

As I was saying, evening fares in the north have been hiked by up to 162% at the Secretary of State’s direct insistence. The Department’s own McNulty review has warned that our fragmented railways have a ticketing system that

“is complex, often appears illogical and is hard for the uninitiated (and even the initiated) to understand.”

There is also an efficiency gap of up to 40% compared with the best performing European operators, which is wasting money that should be used to address the rising cost of travel and to fund investment.

At the last election we were promised part-time season tickets, and a pilot by Southern Railway found that they could save some commuters 50% of the cost of their travel. However, the smart ticketing programme that underpins the system is 78% over budget and delayed by three years, and there are rumours that it could be cancelled. Will the Secretary of State tell us today whether the south-east flexible ticketing programme is being dropped?

Ministers might claim that services are getting better for everyone, but I urge them to mind the gap between their rhetoric and reality. We all remember the Under-Secretary of State for Transport, the hon. Member for Devizes (Claire Perry), saying that rail passengers had to realise that they were paying

“fair fares for a comfortable commute”.

[Stephen Hammond (Wimbledon) (Con)]

In the Corbyn land of rhetoric, the hon. Lady seems to have forgotten that fares went up by 11% in the last year of the Labour Government alone. It is this Government who have frozen regulated fares for three years. Will she acknowledge that fact and make sure that she puts the truth on the record?

[Lilian Greenwood]

If the hon. Gentleman looks at our record, he will see that rail fares increased only by the level of inflation or were actually cut in six of the 13 years that Labour was in power. Fares rose in some years, and that helped to fund investment. Under Labour, there was more investment in rail in real terms than under any previous Government. Under this Government, that link has been broken.

The Transport Secretary said that only commuters were paying regulated fares, and that unregulated fares could be “quite cheap”. Those comments are a world away from the frustrations endured by passengers every day on Southern and Thameslink, some of which were described in the House today by my hon. Friend the Member for Streatham (Mr Umunna). They reflect an increasingly overcrowded and unreliable network.

In 2009, the Conservative party’s rail policy review stated:

“Fare rises come with tacit Government approval and are often the direct result of the franchise process”.

Will the Secretary of State therefore explain why he intends above-inflation rises to resume after 2020, as his Department’s recent consultation on the East Anglian franchise makes clear? Passengers were always told that higher fares were necessary to pay for improvements, but under this Government that link has been broken. The electrification of key lines was first paused and then shambolically “unpaused” one week before the Conservative party conference, and those projects are now delayed by years.

That goes to the heart of public trust in the railways. Ministers and Conservative Back Benchers went into the last election on a manifesto that said that key improvements would be delivered in this Parliament, but information about the true state of those programmes was kept concealed within the Department. The Transport Secretary has said that he was not informed about the state of the electrification programme until after May, but why did he not pose searching questions within the Department in October 2014, when my predecessor, my hon. Friend the Member for Wakefield (Mary Creagh), challenged him to say

“which electrification projects will be delayed or cancelled”—[Official Report, 23 October 2014; Vol. 586, c. 1030.]

due to cost overruns on the great western main line?

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

I have one curious question for the hon. Lady: how is this all going to be paid for? Is it going to be borrowed or are we going to put prices up?

[Lilian Greenwood]

I shall deal with that very question later on in my speech, so the hon. Gentleman should listen attentively.

Why did the Transport Secretary not raise the alarm in the last Parliament when the estimated cost of electrifying the midland main line rose from £250 million to £540 million, and then to £1.3 billion? Why did he not do so when the cost estimates for great western electrification rose from £548 million to £930 million, and then to £1.7 billion? Of course, the estimate has now risen further still, to £2.8 billion. Why did he not act when the Transport Committee warned in January 2015:

“Key rail enhancement projects...have been announced by Ministers without Network Rail having a clear estimate of what the projects will cost, leading to uncertainty about whether the projects will be delivered on time, or at all”?

Will the Transport Secretary confirm that he commissioned a report on the state of the electrification programme, which was given to him in September 2014? This report has never been published, and a Freedom of Information Act request for a copy has been personally refused by a Minister in his Department. What did that report say, and what has he got to hide?

The truth is that the Department was clearly warned by Network Rail about the impending northern power cut. The company’s board discussed last March

“the decisions required jointly with the DFT”

regarding

“enhancement deferrals from June”.

Network Rail’s chief executive has confirmed to me:

“In mid-March 2015, Network Rail informed DfT that decisions may need to be made in the coming months about the deferral of certain schemes.”

If the Secretary of State really was not aware of what his own Department and Network Rail were doing, there is only one possible explanation: he made it clear that he did not want to know. He failed to take responsibility, and passengers are now paying the price.

We were told that 850 miles of track would be electrified before 2019, but now the Department is refusing to say how many miles of track will be electrified in this Parliament. Is it half the original target? Is it a quarter? Will the Transport Secretary confirm that by 2019 this Government would do well to realise the plans for electrification set out by a Labour Secretary of State, the noble Lord Adonis, a decade earlier?

Let me return to the cost of tickets.

[Sir Simon Burns (Chelmsford) (Con)]

rose—

[Lilian Greenwood]

I am not going to give way at the moment, because I want to make some progress. The Government claim they will not increase regulated fares above inflation, and we will hold them to that promise, but may I remind the Transport Secretary of his comments from two years ago, when he said that Labour’s fares freeze

“would cost £1.8 billion over the lifetime of the next parliament and be paid for by more borrowing and higher taxes.”

Given that the black hole in Network Rail's finances will be plugged by £1.8 billion-worth of asset sales and £700 million of additional borrowing, has not this Government’s ostrich-like approach to the railways resulted in what the Transport Secretary’s own party might call more spending, more borrowing, and more debt?

We need investment in our rail network, both in HS2 and in the existing railways. I am proud of the fact that we saw record investment between 1997 and 2010. Our Government invested more in the railways, in real terms, than any previous Government, addressing the chronic maintenance backlog, replacing thousands of unsafe, slam-door Mark 1 coaches and ending the appalling safety crisis created by the disaster that was Railtrack. I am concerned that the Government’s programme has come to resemble not the much heralded “biggest investment since the Victorian era” that we have heard so much about, but the ill-prepared 1950s modernisation plan that did so much damage to support for the railways.

As we come to make the case for additional investment, we need Ministers to own up to the challenges that the programme continues to face, but again and again, the message is the same: they did not know; they were not responsible; and they were not there. We could ask what exactly Ministers were doing instead of keeping improvements on track, because they were not keeping an eye on the franchising programme, which collapsed in 2012 costing taxpayers more than £50 million, or on the allocation of trains in the north, as the Secretary of State approved the transfer of new rolling stock from TransPennine to the south, triggering a capacity crisis that cost taxpayers another £20 million to resolve. It seems that their focus was solely on privatising East Coast, a successful public sector rail operator, which delivered record passenger satisfaction and punctuality scores—

[Stephen Hammond]

rose—

[Lilian Greenwood]

No, I have already given way to the hon. Gentleman.

East Coast cut its fares in real terms in 2014 and reinvested all its profits in the service. As reported last week, it was delivering the best-ever service on the line in the weeks before it was sold. Instead of extending that successful model of public ownership to the other franchise services, the route was prioritised to be sold off. Worse, we now learn that Directly Operated Railways, East Coast’s parent company, has effectively been mothballed and its functions outsourced to companies with no experience of operating passenger services.

We are left in the absurd position of divesting our in-house railway expertise at precisely the moment that several franchises and contracting competitions appear to be in doubt. Now, on top of the damage already done, the Government are seriously considering privatising Network Rail. They have already tested the theory to destruction with Railtrack. A sell-off of Network Rail will put profit before passengers and risk dragging us back to the worst excesses of privatisation. I say to the Transport Secretary: do not go down this road. We know how it ends and we on the Labour Benches will oppose it all the way.

May I say how disappointing it was that the Scottish National party in government not only issued a conventional franchise for ScotRail, but passed up the opportunity to invite a public sector bidder for the contract? The franchise was awarded a full month after Gordon Brown, the former right hon. Member for Kirkcaldy and Cowdenbeath, made it clear that, on the forthcoming Smith agreement, enforced rail privatisation will be no more and the right to include a public sector option is currently before Parliament in the Scotland Bill. Labour urged the Scottish Government at the time to postpone the competition, but that call was rejected.

[Callum McCaig (Aberdeen South) (SNP)]

I thank the hon. Lady for so kindly giving way. I am pleased that she is addressing this part of the motion. I feel that the request is particularly ironic given that she talked about the powers that local government in England should have. The Scottish Parliament, and indeed the Scottish Government, do not have such powers. What she and her party are encouraging is the Scottish Government to break the law. Will she explain why that is the case?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Before the hon. Lady answers the intervention, may I say that she has been very courteous in taking a lot of interventions—and it is indeed good to have a lively debate—but this debate has less than an hour and a half to run? The hon. Lady has spoken for some 25 minutes, and I am sure that she will be aware that there are many other people who wish to speak.

[Lilian Greenwood]

I will move towards finishing my speech, Madam Deputy Speaker.

It is a pity that the hon. Gentleman did not refer to the fact that the Labour Government fully devolved the ScotRail franchise, or that it was Labour that secured the change to the Railways Act 1993 through the Smith commission. The invitation to tender for the ScotRail franchise, issued by the SNP Government, said:

“Transport Scotland reserves the right to alter the timetable or the process, or to terminate this process at its sole discretion.”

There we have it. It was entirely in the Scottish Government’s power to wait until the 1993 Act could be amended, but they chose not to do so. There is nothing in the 1993 Act or in the ScotRail invitation to tender that prevented them from delaying the competition until section 25 of that Act was amended. It is regrettable to see the inaccurate amendment tabled by SNP Members.

It falls to Labour to set out the case for reforming our transport services and addressing the rising cost of public transport. It is what Labour is doing in local government, winning concessions from Whitehall. It is what my right hon. Friend the Member for Tooting (Sadiq Khan) will do as Labour’s Mayor of London by putting bus and rail passengers first. We must play our part in Parliament too, and I urge Members to support the motion today.